1.

What are the personal and organizational reasons that led Ricardo
Semler to change his leadership style so markedly?
Ricardo Semler had taken over the reins of the company from his father in
1980. By 1982, he had taken measures to modernize the company and
make its processes more efficient. However, he did this by forcing
discipline and by instilling a pressure to perform which eventually created
tension in the business environment. Employees were working long hours
and were under immense stress. The autocratic nature and the
suffocating environment had led the workers to a point where they began
to stop caring for their work and the distress was becoming omnipresent.
This culture of rigid controls and micro management was brought to an
end by the incident at the annual corporate retreat where one of the
employees drew a cartoon figure (of Grim Reaper holding a scythe
surrounded by bleeding stick figures) as a symbol of rebellion against the
entire authoritarian culture that was prevalent. It was at this retreat that
Ricardo realized that a radical intervention and a turnaround of methods
were needed within the organization. On the personal front, it was
Ricardos health that acted as the silent tell tale of the autocratic
leadership style followed in the company. The stress and its effect on his
health finally came to the fore when he collapsed on the floor during a
factory visit that he went to in the U.S. He was rushed to a nearby clinic
for medical help. The rigid controls and tyrannical nature of the company
had led to an advanced form of stress within a short span of time and that

too, in a man only aged only 25. Ricardo was strongly advised an overhaul
of his life- work and personal, if any- due to this diagnosis.
2. How would you characterize Semlers early leadership style? And his
later leadership style?
Ricardo Semlers early leadership style was authoritarian, hierarchical and
controlling. He had a very rebellious nature and didnt like his fathers rigid
schedule and excessive punctuality. As soon as he took over, he revamped
the entire organization structure and followed a very tough-minded and
statistical approach which led to a great deal of stress and tension in the
workforce which reflected in their attitude and performance. It had created a
lot of distrust and an unconducive work environment for the workers and also
took a toll on his health.Ricardos later leadership style was a reflection of
the change in his personality and approach to life. He was more democratic,
flexible, risk-taking and willing to think outside of conventional approaches.
He placed trust in his employees and let go off the need to control by giving
them the freedom to run the company themselves by getting rid of the rigid
organization

structure

and

promoted

equality

among

the

workforce

irrespective of their rank. Transparency in operations was encouraged and

workers were allowed to design their work role which allowed them to
maximize their efficiency. The most important aspect was he was patient
enough to give the radical approach enough time to be absorbed by the
system and bear results.

3.To what extent do you think Ricardo would succeed as a leader in other
types of organizations?
As mentioned in the case, Ricardos leadership style is characterized by
trusting employees completely, sharing power and information, encouraging
dissent and celebrating true democracy. While this method seems to work
tremendously for SEMCO, Lumiar School and Botanique Hotel, there are
several settings where this kind of leadership style might not succeed.
1 Complete faith in employees poses various threats to organizations
that obtain their competitive advantage through operational
excellence. Companies in sectors like manufacturing, healthcare, etc.
that strategically build differentiation through low costs and tight
process controls would be particularly vulnerable to negative
consequences of employee misconduct. For example, contract
employees, low wage workers, etc. would no longer have the incentive
to deliver timely and quality results.
2 Sharing information can be risky in organizations that operate in highly
competitive environments. In such settings, the company would be
prone to information leakages and hence losing any sustainable
competitive advantages. Also, in settings where clients entrust
companies with highly sensitive internal information, any information
leakages can be fatal and result in loss of clientele and reputation.
3 The profit sharing model seems to work very well since the profits of
the company are restricted to the organization. In this case, the

employees can be expected to prioritize the interests of the company

over their own and bring integrity to the workplace. However, in
settings where the profits are not entirely withheld by the organization
(for example, publicly traded corporations), the company is more prone
to employees deviating from work ethics.
In addition to the above reasons, there are also some softer aspects like
external shareholder trust, employee cultural background, etc. that might
pose challenges in various organizations and geographical settings.
4. Why does Ricardo Semlers new leadership style work?
Ricardo Semlers New Leadership style was based on three broad areas of
Democracy, Ownership and Information to all. Ricardo adopted hands off
style by giving the employees as much freedom as possible. He gave all the
power to the employees to decide everything on they own. This trust on the
employees led to improved loyalty and efficiency across the roles, as
everyone took it with pride and drive on own without monitoring for reaching
the goals. His style gave ownership to everyone with initiatives like change in
organization structure , profit sharing program, Job rotation and training,
Participatory decision making, recruiting own staff and managers,360 degree
feedback system. As a result accountability increased across the organization
which in turn translated into higher productivity. Ricardo Style of information
to all on everything gave the system transparency. Employees had all
information including the firms financial data, making employees

understanding what was good and improve what was bad. This transparency
worked in taking faster decisions and buy in of employees to initiate change.
His style and belief on giving freedom to employees, giving back profits to
employees and transparency works in keeping the employees motivated,
innovative, flexible and adaptable to change. He used different situational
leadership styles that suited to different scenarios